Estate Planning
The term ‘estate planning’ for many people is unknown territory and perceived as simply the writing of a Will. The reality is that anyone who is earning an income or has any assets has a need for some level of estate planning advice.
Even at a young age you may have specific wishes for the way you want your assets divided if something unexpected happens. If you have children, your needs may change and your final wishes may need more sophisticated estate planning consideration. As your assets grow and you may welcome grandchildren to your family, your needs can become more complex and need a more careful review.
Estate planning is more than just making a will
A will helps you express your wishes in a concrete way so that your loved ones avoid uncertainty and legal complications when you die. It is the document which captures your wishes on what will happen to your estate, but, although it is an essential document it is not always a definitive way to manage what you want done with your estate.
Without a will, you leave yourself open to government discretion on how your assets are distributed and how your children are looked after if they are under 18. While the family’s best interests may be considered, the actual outcomes could be very different to what you would personally choose. The lack of a will can also cause delays in settling your estate
Who will control your super and life insurance?
Your superannuation and life insurance can be two of the largest assets in your estate, but their distribution upon death is not necessarily covered by your will.
If you own a life insurance policy, proceeds can go into your estate or be apportioned to nominated beneficiaries, depending on how it has been set up. Superannuation death benefits can only be paid to your estate or to ‘dependents’ and in many cases, members’ death benefit nominations are not binding on a super fund trustee. Careful management of how you set up your nominations can avoid trustee discretion to distribute funds.
Superannuation Death Nominations
A superannuation death benefit is a payment you make to a dependent beneficiary or to the trustee of a deceased estate after the member has died. You should make this payment as soon as possible after the member’s death.
The form of the benefit payment, and who it is paid to, will depend on the governing rules of your fund and the relevant requirements of the Superannuation Industry (Supervision) Regulations 1994 (SISR). You should also consider what tax may be payable for your beneficiaries.
Understanding tax implications for your superannuation death benefits and associated insurance benefits held in your super is vital as this will differ depending on whether beneficiaries are dependents or non-dependents. All these issues are much better when considered at the planning stage rather than waiting for them to become a problem when it is too late.
Our expert advice in managing your estate can be invaluable in maintaining family harmony, reducing tax liabilities and making sure your final wishes are carried out with your assets.